culling wealth

Though somewhat predictable, the much rumoured decision in the United States that Kenneth R. Feinberg, the U.S. special master on compensation, will order a limitation on salaries of banking executives whose institutions were involved in the bailouts sets a terrifying precedent. Though the alarms were sounded the moment the government decided to co-mingle in capitalist waters, I had hoped that this final move would not be made.

As reported in a variety of media sources the cash portion of salaries for the twenty-five highest-paid employees of institutions including AIG, Bank of America, Citigroup, Chrysler Group LLC, Chrysler Financial Corp., General Motors Co. and GMAC Inc. will be reduced between fifty and ninety percent.

While the public outcry of stratospheric salaries during a severe economic recession is understandable, moves such as these will have a dramatic long-term negative impact upon the entire economy and the institutions as a whole. The long road of economic recovery does not come with limiting salaries but by sowing the seeds of success through incentive and economic freedom. Though the first error was both the nature of the bail-out as well as the governments foray into business, this is a further example of unsound leadership at the top and a dramatic shift in the direction of the country.

Though the populous, with veritable pitchfork and burning torch in-hand, is clamouring for "change", this type is a further nail in the coffin of capitalism of nation that once embodied it. Leadership is meant to provide guidance and make the decisions that will lead to better future, even if they are difficult and require the vision to see beyond the surface. This type of decision, while it may be applauded on Main Street is a simple bow to all-mighty vote and that will derail long-term future growth and further choke of wealth development outside of the upper few. While unemployment soars within the nation, in the perverse opposite direction of the DJIA, the government’s action should have started with providing incentive for private investment and creating wealth, not culling it.